Martin Lewis has issued a warning to homeowners after the Bank of England's interest rate rise today (November 3). In a bid to control inflation amid the cost of living crisis, the Monetary Policy Committee voted to increase interest rates from 2.25 per cent to 3 per cent - which is the highest base rate since the recession in 2008.
The 0.75 per cent rise is also the biggest interest rate increase since 1989 and the eighth consecutive time that the Bank has raised rates in less than a year. But with higher interest rates also comes higher mortgage rates, which has sent many homeowners into a state of panic.
Martin Lewis took to his Twitter account soon after the news broke at 12pm on Thursday to issue a word of warning. The money-saving expert, who is known for his insightful financial advice, addressed his 1.9m followers on Twitter and explained how mortgage holders could be affected.
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Martin acknowledged that many homeowners across the UK could now see their monthly mortgage repayments rise once again, which happened last in September after the mini-budget was announced by former Chancellor, Kwasi Kwarteng.
But it seems as though it is those of variable and tracker rate mortgages that will be most affected at the moment.
Martin Lewis tweeted: "Bank of England has increased base rates by 0.75% pts to 3%. - Variable/tracker rate mortgages will rise by roughly £40/mth (£480/yr) per £100,000 of mortgage - Existing fixes won't change, but when they end new deals will be far costlier."
He also warned people with a savings account to 'ditch and switch'.
"Top paying easy access savings accounts will likely rise but it can take a month. Most big bank savings will continue to pay diddly squat, so ditch & switch The jury's out on if top fixed savings will rise much or if this rise has already been baked in. Ill keep u updated," Martin said.
The Bank of England has also warned that the UK could be facing the longest period of recession since reliable records began.
If current market expectations prove correct, the economy could fall into eight consecutive quarters of negative growth. It would be the longest period of uninterrupted decline that the nation has experienced for around a century.
However, it would be a milder recession than in previous times. From its highest to lowest point, gross domestic product (GDP) is expected to drop 2.9 per cent, a much smaller decrease than the 6.3 per cent drop seen during the 2008 financial crisis.
The Bank also predicted inflation would peak at around 11 per cent at the end of this year, while the unemployment rate could hit 6.4 per cent by the end of 2025.
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